The Coffee Bean & Tea Leaf(CBTL), Business strategy case study

Coffee Bean Company Overview
Analyzing the internal and external environment
Strength and Weakness
Business Level and Corporate Level Strategies

1. I. Introduction:
Company Overview:
 The Coffee Bean & Tea Leaf(CBTL), established in 1963 in Southern California (OUR
HERITAGE, 2023), has a rich history of delivering handcrafted products, notably
introducing the Ice Blended drink in 1987 (OUR HERITAGE, 2023), marking a pivotal
moment in its legacy.
 Initially founded by Herbert Hyman as a coffee service for office (OUR HERITAGE,
2023)s, the chain, commonly known as CBTL, has expanded into a renowned American
coffee shop brand recognized globally.
 Acquired by Jollibee Foods Corporation in 2019 for $550 million (jollibee food
corporation, 2021), The Coffee Bean & Tea Leaf now operates under their umbrella,
boasting over 1,000 locations across the United States and 31 other countries,
showcasing its significant global presence. (jollibee food corporation, 2021)
Market Overview

2.  The Coffee market encompasses Roast Coffee (ground coffee, whole beans) prepared
using various methods and Instant Coffee, excluding Ready-to-Drink beverages, offering
a wide range of options for consumers. (Coffee-Worldwide, 2023)
 Globally, the Coffee market generates substantial revenue, reaching $88.3 billion in
2023, and is projected to grow at a steady annual rate of 4.61% from 2023 to 2028.
(Coffee-Worldwide, 2023)
 The United States stands out as the top revenue generator in the Coffee market,
reaching $11 billion in 2023, with a per-person revenue of $11.50, reflecting its
significant contribution to the global market. (Coffee-Worldwide, 2023)

Financial status
 According to Jollibee's annual report, as of 2022, CBTL's global revenue grew 22.9%
year-over-year, with 103 new stores opened in 20 countries (jollibee food corporation,
2023). In particular, Malaysia opened 30 new stores, the most of any country in the
world.
 However, Jollibee's system wide sales declined by approximately 28% year-on-year in
2020, and the total number of CBTL stores in the Philippines declined sharply from
1,173 to 1,071 from 2019 to 2020.

3. Source : Jollibee annual report(2020)

II. Internal Environment Analysis:
Company's Strengths:
1. Brand Reputation:
 The Coffee Bean & Tea Leaf strategically places franchises in high-traffic areas across
Asian markets to expand its brand's presence internationally, utilizing master franchising
as an effective method to penetrate culturally diverse regions.
 In order to survive competition from other brands, it is important to maintain a stable
position in the current market and adequate profit margins rather than compete for
market share. It is necessary to imitate the marketing strategies of industry leaders and
partially differentiate marketing activities based on the subjective attributes of the
product, design, and price. (KimK., 2010)

2. Product Quality and Variety:

4.  The brand's reputation is built on Premium Ingredients, sourcing high-quality coffee
beans and tea leaves globally, ensuring exceptional flavor and taste consistency.
 The menu goes beyond typical options, offering a variety of specialty drinks, seasonal
choices, and customizable selections. This wide range caters to diverse consumer tastes,
making it more appealing to a broader audience.
3. Global Presence and Expansion:
 International Reach: Successfully expanded to over 30 countries, leveraging a franchise
model to establish a global footprint.
 Market Penetration: Presence in diverse markets, adapting to local preferences while
maintaining brand integrity.
4. Sustainability Commitment:
 Ethical Sourcing: Emphasizes ethical sourcing of coffee beans and tea leaves,
contributing to sustainable farming practices and fair trade.
 Environmental Initiatives: Engaged in eco-friendly practices, such as waste reduction and
reusable cup incentives, aligning with growing consumer sustainability concerns.
5. Employee Training and Culture:
 The Coffee Bean & Tea Leaf staff behavior had a significant impact on the customer
satisfaction of this brand (SaputraD.,, 2020). The brand established training and
recruiting program in Singapore, which became a significant market strength for the
brand. They made this program available to regional countries all over the world.
 Training Programs: Consistent training programs ensuring a high level of expertise
among staff, contributing to service quality and product knowledge.

Company's Weaknesses
1. Geographic Concentration:

5.  Limited Presence: Relatively concentrated in specific regions or countries, lacking a
widespread presence compared to some larger global competitors like Starbucks.
 Market Overlap: Potential over-reliance on certain markets, making the business
vulnerable to economic fluctuations in those regions.
2. Technology Integration:
 Digital Advancements: Lagging behind competitors in adopting cutting-edge
technology for customer engagement, mobile ordering, and online presence.
 Inefficient Systems: Operational inefficiencies due to outdated or inadequate technology
infrastructure.
3. Competitive Landscape:
 Intense Competition: Facing fierce competition from global coffee chains and emerging
local specialty cafes, challenging market share and differentiation.
 Pricing Pressure: Difficulty in maintaining competitive pricing while offering premium
quality products.

III. External Environment Analysis:
Opportunities:
1. Market Expansion:
 Untapped Regions: Opportunities for expanding into new markets or regions where the
brand has minimal or no presence, leveraging the success of its established brand
image.
 Emerging Markets: Potential in emerging economies where coffee consumption is rising,
presenting opportunities for market penetration and growth.
2. Technological Integration:

6.  Digital Innovation: Expanding digital offerings with robust mobile apps, online ordering
systems, and loyalty programs to enhance customer engagement and convenience.
 Smart Technology: Embracing smart technology within cafes for interactive customer
experiences, such as interactive menu boards or smart payment systems.
3. Health and Wellness Trends:
 Health-Conscious Consumers: Meeting the growing demand for healthier alternatives by
introducing more organic, low-calorie, or functional beverage options.
 Sustainable Practices: Strengthening sustainability initiatives to resonate with
environmentally conscious consumers, such as eco-friendly packaging and responsible
sourcing.
4. Global and Local Partnerships:
 Local Collaborations: Partnering with local businesses or influencers in specific regions
to create unique promotions or offerings tailored to local tastes and preferences.
 Strategic Alliances: Forging partnerships with tech companies or delivery services to
enhance online presence and streamline delivery services.
5. Specialty Market Segments:
 Focus on Specialty Beverages: Expanding into specialty beverages like cold brews, nitro
coffees, or unique tea blends to cater to enthusiasts seeking premium experiences.
 Niche Targeting: Targeting niche markets, such as specialty teas for wellness enthusiasts
or coffee mania seeking exclusive blends.



Recognized Threats:

7. 1. Consumer Trends:
 Health and Wellness Shifts: Potential loss of customers due to increasing demand for
healthier alternatives and wellness-focused beverages if not adequately addressed in
the menu.
 Trend Adaptability: Failure to adapt quickly to changing consumer preferences and
emerging trends might result in losing market relevance.
2. Supply Chain Disruptions:
 Sourcing Challenges: Risks associated with disruptions in the supply chain, such as
coffee bean or tea leaf shortages due to climate change, geopolitical factors, or
unforeseen events.
 Logistics Issues: Vulnerability to logistical challenges, affecting the timely delivery of
products and impacting customer satisfaction.
3. Environmental and Sustainability Concerns:
 Environmental Impact: Increasing consumer awareness and demand for eco-friendly
practices, creating pressure to adopt more sustainable packaging and waste reduction
strategies.
 Supply Chain Sustainability: Pressure to ensure sustainable and ethical sourcing
practices throughout the supply chain to align with environmentally conscious
consumer expectations


IV. Business Level and Corporate Level Strategies:
Business Level Strategies:

8. 1. Global Expansion and Adaptation:
 CBTL expanded to 27 countries by the end of 2019, operating 1,173 stores worldwide
(jollibee food corporation, 2021). In the United States alone, strategic improvements led
to a remarkable 108% sales increase in 2020 compared to the previous year (jollibee
food corporation, 2021). The brand's move enabled a broader menu selection, with two
new breakfast sandwiches quickly becoming bestselling items.
2. Product Innovation:
 CBTL stands out in the market due to its focus on high-quality products and innovation.
It utilizes individually hand-roasted coffee beans and hand-blended teas sourced from
various regions globally. Additionally, its creation of iconic drinks like The Original Ice
Blended® and being the first global retailer to offer cold brew tea highlights its
commitment to innovation (jollibee food corporation, 2021). Introducing seasonal
beverages and new product selections, such as the winter beverages, healthy bites, and
the Osmanthus Oolong tea, keeps the menu fresh and appeals to changing customer
preferences. This strategy taps into the market's demand for variety and seasonal
offerings, driving customer interest and sales.
3. Community Engagement and Social Responsibility:
 CBTL emphasizes building a community around its brand. Partnering with platforms like
Postmates for on-demand delivery and regularly introducing new products not only
attracts new customers but also keeps existing ones engaged. The brand's focus on
connecting with customers through social media platforms like Facebook and Instagram
indicates an effort to maintain an interactive relationship with its audience. CBTL's
initiatives extended beyond business, with actions such as raising USD75,000 in the USA
for Frontline Heroes and providing thousands of meals and cups of coffee to major
health institutions in the Philippines through customer donations (jollibee food
corporation, 2021). In Malaysia, a donation of RM142,000 sponsored a second mobile
clinic unit, highlighting the brand's commitment to supporting communities. (jollibee
food corporation, 2021)
4. Regional Customization and Market Penetration:
 The brand's regional marketing strategies in places like Singapore, offering bundle
promotions reflect a localized approach to capturing market share. CBTL's return to
New York with the opening of a new Brooklyn location marks a strategic move to re-

9. establish presence in key markets (jollibee food corporation, 2021). The strategy
involves both organic growth and strategic expansion. CBTL saw store expansions in
various countries, such as the addition of 20 stores in the Philippines and the opening
of 17 stores in South Korea in 2019 (jollibee food corporation, 2021). This expansion
aims to capture market share and increase brand presence in key locations.
5. Partnerships and Diversification:
 Collaborations with platforms like Postmates, DoorDash, Lazada, and Shopee expanded
CBTL's reach. In Malaysia, partnering with Shopee contributed to 17% of total average
daily sales (jollibee food corporation, 2021). Furthermore, alliances with renowned
delivery platforms aided in increasing sales during nationwide lockdowns.


Corporate Level Strategies:
1. Global Market Penetration:
 CBTL's widespread global presence with 1,071 stores across 27 countries (jollibee food
corporation, 2023)aligns with Jollibee's vision for global market penetration. The brand's
commitment to high-quality, handcrafted products sourced from various continents
underscores a shared dedication to excellence.
 The acquisition of CBTL, a brand present in 27 countries, significantly broadens Jollibee's
international footprint. By adding 33 percent to its global system-wide sales (jollibee
food corporation, 2023) and expanding its total store network by 26 percent, Jollibee
aims to strengthen its position as a global player in the restaurant industry.
 Jollibee’s ambitions in the US and India form part of the group’s wider global growth
strategy. In February 2021, Jollibee said it would open 100 Highlands Coffee outlets in
2021, mostly in the coffee chain’s native Vietnamese market, adding that the profitable
coffee chain was the group’s fastest-growing business. (World Coffee Portal, 2021)
2. Increased Contribution from International Businesses:

10.  Jollibee is strategically aiming to raise the contribution from international businesses to
36 percent of total sales (KleinDanny, 2019). This move reduces its reliance on domestic
markets and diversifies its revenue streams, potentially reducing vulnerability to
economic fluctuations in specific regions.
 Expansion strategies tailored to specific regions, such as the Philippines' addition of 20
stores and South Korea's opening of 17 stores in 2019 (jollibee food corporation, 2020),
highlight a commitment to regional growth. Tactical promotions in Singapore, utilizing
cost-effective social media channels targeting the country's active social media users,
showcase an understanding of local market dynamics.
3. Focus on Coffee Business Growth:
 With the addition of CBTL and the existing Highlands Coffee in Vietnam, Jollibee aims
to become a significant player in the profitable coffee industry. This acquisition
positions Jollibee as a major contender in the fast-growing coffee market, with the
coffee business accounting for 14 percent of JFC's worldwide system sales (KleinDanny,
2019).
4. Brand Strengthening and Expansion
 Jollibee intends to accelerate the growth of CBTL, especially in Asia (KleinDanny, 2019),
by focusing on enhancing its brand development, marketing strategies, and franchise
support systems. This approach suggests a commitment to leveraging CBTL's existing
strengths while capitalizing on the Asian market's potential for further expansion.

V. Risks and Mitigation Strategies:
Identified Risks:

11. 1. Market Saturation and Competition:
 Operating in 27 countries with 1,173 stores exposes CBTL to potential market saturation.
High competition in the coffee and tea industry, especially in key markets like the US
and Asia, might pose challenges in standing out among numerous competitors.
2. Economic Fluctuations and Regional Challenges:
 Operating across multiple regions exposes CBTL to diverse economic conditions and
regional challenges. Economic downturns, political instability, or changes in consumer
behavior due to unforeseen circumstances (such as the pandemic) might affect sales
and growth in specific markets.
3. Dependency on Partnerships and Delivery Services:
 Relying heavily on partnerships with delivery platforms like Postmates (The Coffee Bean
Team, 2019) and DoorDash exposes CBTL to risks associated with the performance and
reliability of these third-party services. Any disruptions or changes in partnership terms
could impact delivery capabilities and customer satisfaction.
4. Consumer Preferences and Product Innovation:
 Continuous innovation in menu offerings is critical in the competitive market. Failure to
meet evolving consumer preferences or adapt swiftly to changing trends might lead to
reduced foot traffic and declining sales.
5. Social and Environmental Responsibility Risks:
 Despite CBTL's commitment to social responsibility, it also brings potential risks. Any
failure to deliver on promised social initiatives or negative environmental impact from
sourcing practices could damage the brand's reputation.
6. Operational Challenges with Expansion:
 Expanding rapidly into new regions or markets may pose operational challenges such as
supply chain complexities, local regulatory compliance, and managing cultural
differences, impacting the brand's efficiency and profitability

12. VI. Conclusion:
 The internal analysis highlights The Coffee Bean & Tea Leaf's strengths in brand
reputation, product quality, customer experience, global presence, innovation,
sustainability commitment, and employee training. These elements form a strong
foundation for its success, fostering brand loyalty and differentiation.
 Externally, opportunities in market expansion, technological integration, health-
conscious trends, and strategic partnerships align with the brand's strengths.
However, threats stemming from competitive pressure, economic volatility,
changing consumer preferences, regulatory challenges, and supply chain
disruptions require proactive management.
 Jollibee's corporate strategy with the acquisition of Coffee Bean & Tea Leaf is
centered around global expansion, diversification, leveraging the profitable coffee
market, and maximizing the potential for growth and market capitalization in the
competitive restaurant industry.
 Jollibee's strategic acquisition of Coffee Bean & Tea Leaf (CBTL) marks a pivotal
move in its global expansion efforts. CBTL's presence in 27 countries significantly
bolsters Jollibee's international footprint, driving a 14 percent increase in global
system-wide sales and expanding the store network by 26 percent. (jollibee food
corporation, 2021) This strategic move aims to fortify Jollibee's standing as a
prominent global player in the restaurant industry.
 Jollibee's financial performance are weakened. system wide sales declined by
approximately 28% year-on-year in 2020 (jollibee food corporation, 2020) and the
total number of CBTL stores in the Philippines declined sharply from 1,173 to
1,071 from 2019 to 2020.
 The company is strategically pivoting towards elevating its international business's
contribution to 36 percent of total sales. This strategic shift aims to reduce
reliance on domestic markets, creating a diversified revenue stream that mitigates
vulnerability to economic fluctuations in specific regions.
 Jollibee's keen focus on the coffee business, leveraging CBTL and Highlands Coffee

13. in Vietnam, reflects its ambition to carve a significant niche in the lucrative coffee
industry. With coffee sales already accounting for 14 percent of the company's
worldwide system sales, this acquisition positions Jollibee as a formidable
contender in the fast-growing global coffee market.
 CBTL's strategic initiatives in 2020 were diverse and impactful. The brand
prioritized partnerships with delivery platforms and in-app integrations, resulting in
a notable 108% sales surge in the US and a 17% share in Malaysia (jollibee food
corporation, 2021). Transitioning to non-kosher status in the US allowed for menu
expansion, notably successful with new breakfast sandwiches and a revival of
favorites like The Original Ice Blended® drink. The brand strategically re-entered
the competitive New York market after an absence, showcasing plans for further
growth. Adaptive measures during the pandemic, such as promotions and
extended store hours, aimed at retaining market share and consumer interest
across regions like Singapore. CBTL's innovations in menus, introducing new coffee
series and petite cakes in Malaysia, boosted sales and catered to evolving
consumer preferences. Despite challenges, international store openings and
partnerships with e-commerce giants reflected CBTL's resilience and diversified
sales approach, reinforcing its commitment to expansion.